Dollar resumes its rally, showing strongest week since early April

Dollar index rises, yen falls against dollar

  
A money counting machine is pictured at a currency exchange office in Istanbul, Turkey August 13, 2018.

A money counting machine is pictured at a currency exchange office in Istanbul, Turkey August 13, 2018.

REUTERS/Osman Orsal

NEW YORK - The dollar gained ground on Friday and measured its biggest weekly gain since early April as investors worried about a slowing economic recovery, rising coronavirus infections in Europe, uncertainty about U.S. stimulus, and the upcoming elections here.

While orders for key U.S. capital goods increased more than expected in August, orders for durable goods - ranging from toasters to aircraft that are meant to last three years or more - rose 0.4% in August after jumping 11.7% in July.

With so much for investors to feel uncertain about, JB Mackenzie, Managing director of futures and forex at TD Ameritrade sees increasing volatility ahead of the Nov. 3 U.S. elections and as a result, more demand for the dollar. 

"The election and stimulus and the continued economic recovery, those three parts, if those are not working lock step, there very well could be a movement to the dollar as that flight to safety trade," said Mackenzie. 

Mackenzie is also looking at factors such as Britain's struggle to come up with a plan to exit the European Union as an overseas factor that could also keep the dollar strong. 

While the greenback fell slightly on Thursday, after four days of gains, as equities rose on hopes for stimulus, the U.S. currency's rally resumed on Friday as worries resurfaced. 

"Yesterday was a calmer more positive sentiment ... then this morning's durable goods show that the pace of growth in the United States is very uneven," said Juan Perez, senior currency trader and strategist at Tempus Inc. 

Along with weaker U.S. and overseas economic data and expectations, Perez said dollar demand was also boosted by  Washington's failure to create a stimulus package and concerns ahead of the U.S. election. 

Top Republicans on Thursday repudiated President Donald Trump's refusal to commit to a peaceful transfer of power after Trump, also a Republican, said Wednesday that he expects the election result to end up being settled by the Supreme Court.

"In times like that when the chaos and havoc and blurriness of the future is so intense and so dense, that's when the dollar is going to rise once again," said Perez. "Markets are always going to be afraid when a strong government does not give clarity about continuance, about stability." 

The dollar index, which measures the greenback against a basket of major currencies, was last up 0.31% at 94.601 and was on track for its best weekly percentage gain since the week early April.

With five straight days of gains against Japan's yen, the greenback showed its strongest weekly gain versus the yen since early June. For the day, the yen was lower against the dollar at 105.60.

The euro had its largest weekly fall against the dollar since early April. The dollar, in a six-day rally against the Swiss Franc, showed its biggest weekly rise also since early April against that currency.

For the day the euro was down 0.40% at $1.1627, after hitting a roughly two-month lows.

Riskier currencies fell, with Australian dollar lower 0.28% on the day and down around 3.6% for the week in its biggest weekly decline since the week ending March 20. The New Zealand dollar declined 0.08% against the greenback for the day but showing its biggest weekly dip since the week ending May 15.

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    Currency bid prices at 3:04PM (1904 GMT)

 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid

                                              Previous                   Change                 

                                              Session                                           

 Euro/Dollar      EUR=        $1.1627        $1.1672     -0.39%         +3.72%      +1.1684     +1.1613

 Dollar/Yen       JPY=        105.6000       105.4000    +0.19%         -2.99%      +105.6900   +105.2500

 Euro/Yen         EURJPY=     122.79         123.00      -0.17%         +0.69%      +123.1500   +122.6200

 Dollar/Swiss     CHF=        0.9285         0.9266      +0.21%         -4.06%      +0.9296     +0.9251

 Sterling/Dollar  GBP=        1.2730         1.2749      -0.15%         -3.99%      +1.2804     +1.2688

 Dollar/Canadian  CAD=        1.3392         1.3362      +0.22%         +3.13%      +1.3418     +1.3338

 Australian/Doll  AUD=        0.7025         0.7045      -0.28%         +0.06%      +0.7086     +0.7007

 ar                                                                                             

 Euro/Swiss       EURCHF=     1.0799         1.0813      -0.13%         -0.49%      +1.0821     +1.0792

 Euro/Sterling    EURGBP=     0.9131         0.9149      -0.20%         +8.01%      +0.9168     +0.9120

 NZ               NZD=        0.6545         0.6550      -0.08%         -2.84%      +0.6591     +0.6529

 Dollar/Dollar                                                                                  

 Dollar/Norway    NOK=        9.5780         9.4967      +0.86%         +9.11%      +9.6151     +9.4833

 Euro/Norway      EURNOK=     11.1392        11.0858     +0.48%         +13.23%     +11.1858    +11.0679

 Dollar/Sweden    SEK=        9.1263         9.0828      -0.07%         -2.37%      +9.1645     +9.0858

 Euro/Sweden      EURSEK=     10.6125        10.6195     -0.07%         +1.37%      +10.6635    +10.5930

 (Additional reporting by Gertrude Chavez-Dreyfuss in New York, Elizabeth Howcroft in London, Editing by Louise Heavens, Steve Orlofsky and Diane Craft)

© Reuters News 2020

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